🚨 Income Tax Department Is Scanning GST Data: Why Notices Are Flooding In

If you believe GST and Income Tax are separate laws, it’s time for a serious reality check.

👉 The Income Tax Department is actively scanning, cross-checking, and matching GST data with Income-tax returns, and thousands of taxpayers are receiving notices due to mismatches.

With the use of advanced data analytics, AI tools, and system-driven scrutiny, even small inconsistencies between GST returns and ITR can now trigger income-tax notices, additions, and penalties.

 

🔍 Why GST Data Has Become a Big Weapon for the IT Department

Earlier, GST data was used only for indirect tax compliance.
Now, it has become a primary input for direct tax assessments.

The department is matching:

• GST turnover

• ITC claims

• Bank credits

• AIS / TIS data
  with
  👉 Income declared in ITR

Any mismatch = Red Flag 🚩

🔍 What GST Data Is Being Scanned?

1️⃣ Turnover Mismatch – The Biggest Trigger

📊 GST Data Considered

• GSTR-1 (Outward Supplies)

• GSTR-3B (Taxable Turnover)

📑 Income-tax Data Matched With

• ITR (Profit & Loss Account)

• Form 26AS

• AIS / TIS

👉 High-Risk Situation:
GST Turnover > Turnover declared in ITR

⚠️ This is treated as suppression of income unless properly reconciled and explained.

2️⃣ ITC vs Expense Mismatch

• Huge expenses claimed in ITR

• But low or no ITC claimed in GST

👉 Department assumes:
❌ Bogus expenses
❌ Inflation of profit reduction
❌ Accommodation bills

3️⃣ Bank Credits vs GST Sales

• Cash / UPI / POS receipts visible in bank

• But sales not reported in GST or ITR

👉 Bank data + GST + AIS = Triple cross-verification

4️⃣ Fake or Ineligible ITC

• ITC claimed from non-filing or fake suppliers

• Circular trading patterns

• Sudden spike in ITC ratio

👉 Can lead to:

• Income-tax additions u/s 69 / 69C

• GST demand + penalty

• Prosecution in serious cases

5️⃣ Composition Scheme Red Flags

• Composition dealer showing:

  • Abnormally high profits

  • Expenses not allowed under scheme

  • Nature of business not eligible

👉 Automatic scrutiny risk

📩 Types of Notices Being Issued

Based on GST mismatch, taxpayers are receiving:

• Notice u/s 133(6) (information call)

• Scrutiny notice u/s 143(2)

• Reassessment notice u/s 148 (serious cases)

❌ Common Mistakes Taxpayers Are Making

• Showing GST turnover net of GST in ITR without reconciliation

• Not matching GSTR-3B with books

• Ignoring AIS/TIS before filing return

• Treating personal bank receipts as business income

• Claiming expenses without GST trail

• Filing ITR blindly just to meet due date

✅ What Taxpayers MUST Do Now

✔️ Reconcile GST turnover with ITR turnover
✔️ Match GSTR-1, GSTR-3B & books of accounts
✔️ Reconcile GSTR-2B with purchase ledger
✔️ Verify AIS / TIS before filing ITR
✔️ Maintain explanations for:

• Advances

• Credit notes

• Exempt & non-GST supplies

• RCM transactions

, file a revised return immediately

🧠 Expert Insight from Tax Manthan

GST data is no longer just a compliance requirement — it is a surveillance tool for income tax authorities.

Poor GST compliance today means:
🚨 Income-tax notices tomorrow
🚨 Additions, penalties & litigation
🚨 Blocked refunds and scrutiny for years

📌 Final Warning

📢 Mismatch is not a mistake in the eyes of the department — it is a potential tax evasion signal.

If your GST and ITR data are not aligned, notice is not a question of “if”, but “when”.

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